$1.5 billion a year cost to fix pensions?

Absent significant pension system reforms, it would cost the city an extra $1.5 billion a year beginning in 2016 to start the process of restoring financial health to its pension funds, aldermen were warned Monday.

If those costs kicked in, services would be cut, taxes would soar or both. Continuing to rely solely on property taxes to cover pension costs would result in a tripling of the city levy, said Ald. Patrick O'Connor, 40th, chairman of the Workforce Development and Audit Committee.

The tale of looming financial woe came at a six-hour hearing as part of Mayor Rahm Emanuel's push to get pension cost relief for Chicago. Joining Emanuel were mayors of smaller cities, villages and towns throughout the state in urging legislators and Gov. Pat Quinn to enact pension reform — not just for state government, but also for municipalities and counties across Illinois.

"I need Springfield, and not me, but the entire city of Chicago needs Springfield to be a partner in finding a resolution to our retirement security issue," Emanuel said at an unrelated event on Monday. "They've agreed that they're going to deal with this in January."

Like Emanuel, Wilmette Village President Christopher Canning spoke Monday at a meeting of the Metropolitan Mayors Caucus about the need for comprehensive pension reform. He noted all municipalities face a state mandate to start paying enough in 2015 to make sure police and fire pension funds are at least 90 percent funded within 30 years.

Absent pension fund changes — which could include higher employee contributions, later retirement ages, 401(k)-style plans and lower cost-of-living increases — Chicago and other municipalities would be forced to cut services if they can't come up with additional revenue.

In Chicago, the additional police and fire pension cost could reach $580 million in 2016, according to figures provided to O'Connor's committee Monday by the police and fire pension funds. Starting the 30-year process of fully funding two pension funds for city laborers and other workers would cost $614 million starting in 2016, according to figures provided by those funds.

Doing the same for the Chicago Park District would cost another $12 million, officials said. O'Connor estimated the cost of bringing the pension fund for Chicago teachers up to speed, which the state also has required, would be at least $350 million more. The full tally would come to at least $1.5 billion.

"We're not talking about the real Armageddon the city faces if we don't get out of it," said Ald. Richard Mell, 33rd. "We have to solve the situation as quick as we possibly can."

Mell called on pension fund officials to urge Springfield to reform the system, rather than just mandate higher government payments that would result in a "backlash" from taxpayers.

Pension fund officials put part of the blame on fund investments that did poorly during economic downturns, particularly the Great Recession, and early-retirement plans that boosted pension payouts. They also noted that public pensions don't have the same kind of stringent payment requirements as private pensions.

But Ald. Michele Smith, 43rd, who pushed for the hearing, said assessing blame is not the point.

"We are where we are," Smith said. "Questions about blame and all that stuff I don't find particularly helpful. This is a classic: 'We are where we are. Now we've got to start organizing to fix it.'"